Author Topic: Student Loan to triple salary?  (Read 5425 times)

Zhou

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Student Loan to triple salary?
« on: May 17, 2013, 07:10:55 AM »
I'm in my early 20s, with some minimal student debt (4k), and a rubbish bachelors degree. Despite this, I'm financially stable right now, easily saving 1k/month. Should pay off that debt in a couple months. I have no assets to speak of.

I'm looking at various graduate programs in international relations. The best options would cost me up to 30k in loans (depends on improbable scholarships), but they also have 90% employment rates with average salaries for new grads coming in just shy of 60k. Obviously, if I was going to go into serious debt, I'd be working my ass off to beat that average.

On one hand, debt is bad. I should be avoiding it if at all possible. And its definitely possible.

On the other hand, my current annual savings is something like 10k (last year I wasted it on travel and a few months of language school, but I'm working on it). With a 60k job, I could probably bring that up to 30k/yr and invest it. If I beat the average and got a 70k+ job, I could save more like 40k. A lot of these jobs involve living in developing countries, so saving that much isn't actually particularly difficult (Not sheer optimism- I've been living in China for the last couple years).

So, seeing as it could massively increase my annual savings, is this a circumstance where it is correct to take on debt? Or should I follow my mother's advice and go to a cheap school close to home?

(Edit: Spelling)
« Last Edit: May 17, 2013, 07:12:30 AM by Zhou »

James

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Re: Student Loan to triple salary?
« Reply #1 on: May 17, 2013, 07:21:52 AM »
There is a lot unsaid in the phrase "the best options would cost me up to $30k". Does that mean there are options for the same education that would cost less? Would they result in a similar salary?


I am skeptical of someone who has no history of savings when they suggest they will start saving aggressively once they make more money.


Having said all that, spending $30k to increase yearly salary by $60k does sound logical. The $30k debt should be paid off in the first year resulting in a huge long term financial benefit.

nktokyo

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Re: Student Loan to triple salary?
« Reply #2 on: May 17, 2013, 07:25:23 AM »
There is good debt and bad debt and investing in your power to earn more in the long term is usually a good thing if you can keep on top of it.

Zhou

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Re: Student Loan to triple salary?
« Reply #3 on: May 17, 2013, 07:47:01 AM »
There is a lot unsaid in the phrase "the best options would cost me up to $30k". Does that mean there are options for the same education that would cost less? Would they result in a similar salary?

There are other options that are cheaper, certainly. But with lower average salaries and fewer options in terms of where to work. I'll be applying to a couple of these regaurdless.

I am skeptical of someone who has no history of savings when they suggest they will start saving aggressively once they make more money.

Fair enough. I've been saving half my income for the last 3 months, but it isn't exactly an ingrained investment habit. Still, I should be able to pay off my remaining debt next month.

iamsoners

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Re: Student Loan to triple salary?
« Reply #4 on: May 17, 2013, 07:52:50 AM »
a few things for you to consider...

The types of jobs that use IR degrees are basically only available on the coasts and maybe the two or three biggest midwest cities. That is to say, you may be confining yourself to living in a high cost of living area for a long time.

Honestly, I have my doubts about those employment/salary numbers. Are they from the admissions office? Is there a way to independently verify? Can you talk to some alumni?

Experience is everything in IR and you can get a lot of that by working your way up through the right organization. Played well, you can move into a higher salary, get your master's part time and then use the degree for a pay bump.

In general I have a strong bias towards putting of further education until you have some work or life experience that makes you insatiably want to pursue the next degree.

mustachecat

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Re: Student Loan to triple salary?
« Reply #5 on: May 17, 2013, 09:02:05 AM »
If you're "easily saving $1K" a month, but have no assets to speak of, then you're not really saving money.

I don't know anything about international relations, but like soners, am skeptical in general about statistics put out by admissions offices. Can you confirm that the 90% employment rate applies exclusively to full-time employment in the IR field? And can you confirm that the $60K starting salary does not exclusively apply to the same?

What kind of field are you working in now? If not IR, what attracts you to that field? Are there any alternate paths or fields that you could follow instead? Basically, what are your full suite of options?

RedMaple

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Re: Student Loan to triple salary?
« Reply #6 on: May 17, 2013, 03:18:58 PM »
I'm in a similar situation as you. I am planning on going to Grad School in fall of 2014. I would like to go to an Ivy League but I'm not sure if my grades/GMAT score will be up to par. Irrelevant of this, I have been aggressively saving for the last year or so. My goal is to be able to pay my school off in cash. Since I will be a part time student, I will be able to achieve this.

How much to spend for school depends on the competitiveness of your industry as well as your overall potential income. Do the majority of the people in your field go to expensive schools? How much do you make now? What will you make 5, 10, 15 years down the line? Personally, unless your income increases by that 30k in the next 5 years, it wouldn't make sense to do it. In my experience, work experience and education lead to the same salary in roughly the same amount of time.

FlorenceMcGillicutty

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Re: Student Loan to triple salary?
« Reply #7 on: May 17, 2013, 06:37:36 PM »

Honestly, I have my doubts about those employment/salary numbers. Are they from the admissions office? Is there a way to independently verify? Can you talk to some alumni?

Experience is everything in IR and you can get a lot of that by working your way up through the right organization. Played well, you can move into a higher salary, get your master's part time and then use the degree for a pay bump.


Totally agree with this. I can't tell you how many people I know with Master's in IR who can't find jobs. In my opinion, it's the most competitive field there is. I also second the suggestion to get it part time while working. The experience and education combo will make you that much more desirable to employers.

dragoncar

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Re: Student Loan to triple salary?
« Reply #8 on: May 17, 2013, 08:02:42 PM »
I'm confused about your numbers.  You say $60 k would triple your salary implying its $20k now.  But you save $10k/year.  So the extra $40k should really bring your savings higher than $30k total.

How long are the programs?  There is an opportunity cost for being out of the work force.  In my case, I doubled my salary by going to law school for three years but now that I'm planning to FI I figure I'll come out about even (since I won't be in the workforce long enough for the scale to really tip). 

2527

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Re: Student Loan to triple salary?
« Reply #9 on: May 18, 2013, 07:59:15 AM »
I've never really seen a person put an International Relations degree to use unless they have some kind of foundation underneath it.  Like really strong language skills, a very strong knowledge of engineering or science, or pre-existing business ties in two countries, or something like that. 

Other than that, I think getting a good strong marketable skill or credential is a good investment.  Computer programming skills, nursing degree, engineering, electrician, a teaching certificate, etc.  Getting an honest to god skill that makes a person employable is a good investment.

Good luck, and let us know what you decide.